How SMEs Can Help Close the Gender Pay Gap

Big firms will need to report pay for men and women, but SMEs can also take action

By Emma Meakin

The government is vowing to end the gender pay gap within this generation. But do you know how the changes may affect your SME and how you can help the cause?

Proposed changes

Planned government legislation aims to drive fairer pay between male and female employees across the country. It’s looking very likely that the government will require businesses with 250 or more employees to reveal their pay for men and women, including bonuses.

Whilst SMEs won’t be directly affected by the government’s expectations, business owners still need to be aware. Like auto-enrolment, it could cascade down to businesses of all sizes eventually. Also, if an SME is teetering on the edge of becoming a larger company, they may quite suddenly find themselves in the position of having to meet these new mandatory requirements.

The government's measures are expected to be part of a broader set of initiatives to support women in the workplace, and they include…

Extending the legislation to the private and voluntary sectors to ensure equality across the board.

Eliminating all-male boards at FTSE 350 companies (more than 26% of FTSE 100 boards are now made up of women, exceeding the 25% target).

According to the Fawcett Society the pay gap between men and women in full-time work is currently 14.2% – the smallest it's ever been, yet there is still work to do.

Pressure from industry

Despite this new reporting process, its Chief Executive is warning of the potential dangers of this situation with the impending departure of the UK from the EU.

As we look ahead to a UK outside the EU and possibly the single market, we have to guard against the risk of going backwards and losing some of the rights that women have fought for over many years.

Samantha Smethers, Chief Executive, Fawcett Society

What can you do as an SME owner?

Running a business may seem like a never-ending stream of new policies, but it’s worth your while preparing for the next stage in the gender pay gap drive – even if your firm isn't directly impacted at the moment by the new rule. Here are a few handy tips that'll help you support women in work:

1. Treat all staff equally

This may seem like an obvious one, but in reality you may not be treating your staff equally. Does the part-time female accountant receive the same level of salary as her male full-time counterpart? Whilst we don’t mean to suggest that you should pay full and part-time staff the same, the pay of your part-time staff should equate to that of a full-timers with respect to hours worked.

The Equal Pay Act of 1970 sets out that all employees, regardless of gender, have the legal right to equal pay and a cause of action against an unfair employer. Then there's also the Equality Act 2010, which sets out the equal treatment of all. The planned new legislation will concrete these and force employers to address discrepancies.

2. Be transparent

There’s nowhere to hide when the government starts to name and shame employers that pay men more than women. Why not set an example for other SMEs by being one of the first to voluntarily make your average male and female salaries public? It supports your own reputation as a good employer, attracting the best job applicants and impressing investors. Obviously, as an SME, there’s no obligation to do so, it’s worth considering the benefits of showing that you're being responsible.

3. Be clear about pay

Being open about employee pay structures clarifies to your employees what they can expect to earn when they reach a certain level. From the beginning of their employment with you, there's no confusion about how they can increase their salary with you over time. An open salary policy – as explained in this excellent Techcrunch article – also prevents a culture of secrecy, mistrust and resentment among staff. Surely, this can only be a positive thing.

4. Support women workers

Paying your female staff the same as their male counterparts is just one way to support women’s careers and enable them to contribute more to our economy, not to mention to your business.

Encouraging female employees to stay with your business for the long-term by providing them with opportunities to continue working after having a family is a very good start. Flexible working hours, home-working and job shares are just a few tactics employers are using increasingly to keep women at work, and getting them into the senior recruitment pipeline.

Think about the future

If you have big plans for your SME, you need to put into place best practice before you become big enough for the government to scrutinize your behaviour. Think about your company’s future, and that of your industry and the wider economy.